FACTBOX: "Bad bank" remedies for financial crisis

(Reuters) - The U.S. Treasury Department and the Congress are working through the weekend to hammer out details of a plan how to spend of billions of federal dollars to rescue banks from bad mortgage assets now choking the financial system and threatening an economic recession.

The plan marks a shift from case-by-case financial rescues to a broad systemic crisis management and would be the most comprehensive federal bailout since the savings and loan bailout of the 1980s and 90s.

The plan would have some similarities to the Resolution Trust Corp, or RTC, the "bad bank" system Congress created in 1989 to take on bad loans, real estate and other non-performing assets plaguing failed thrift institutions.

Following are some elements of the original RTC and elements that may be adopted in the Treasury's asset clean-up plan.

THE ORIGINAL RTC

* RTC set up in 1989 to manage troubled assets of banks and savings and loan institutions after the Federal Savings and Loan Insurance Corp became overwhelmed by thrift failures.

* RTC closed 747 institutions with assets of $394 billion from 1989 through mid-1995. Combined with FSLIC closures, there were a total of 1,043 institutions closed in the S&L crisis from 1986 through mid-1995, with $519 billion in assets.

* RTC was initially capitalized with $50 billion, including $30 billion in bonds issued by a public-private funding corporation and $20 billion from the Treasury and Federal Home Loan Banks. This quickly proved insufficient and Congress made subsequent appropriations bringing the total funding to $105.1 billion.

* RTC was wound up in 1996 and its remaining tasks were transferred to the Federal Deposit Insurance Corporation.

* RTC and FSLIC direct costs to resolve problem assets totaled $145.7 billion, according to FDIC estimates. Indirect costs, chiefly lost revenues to the federal government and the higher interest cost associated with RTC-related bonds, totaled $7.3 billion, bringing the total bill to $153 billion.

* FDIC estimates that through 1999, the S&L crisis cost taxpayers $124 billion and the thrift industry another $29 billion.

* Other estimates for the total S&L cleanup run as high as $500 billion when the economic cost of lost gross domestic product is included. U.S. Sen. Richard Shelby, the top Republican on the Senate Finance Committee, recently said the crisis cost about $300 billion.

THE NEXT RTC?

* U.S. Treasury Secretary Henry Paulson will propose specific legislation in the next week to remove troubled illiquid assets that are weighing down financial institutions and threatening the U.S. economy.

* The Treasury, Fannie Mae and Freddie Mac will boost purchases of good-quality mortgage backed securities to keep funds flowing to home buyers. Those that do not meet their standards may be put into the rescue program.

* Details of the plan are expected to be hammered out with congressional leaders over the weekend, but the cost will be in the "hundreds of billions of dollars," Paulson said on Friday.